Retirement Health Care Costs - RightCapital Help Center

You can reflect clients' health care costs in retirement on the Profile > Goals screen (or the Goals step of the initial data entry) within the 'Annual Retirement Health Cost' card. The Annual Retirement Health cost will inflate at the health care cost inflation setting.

This card will be present within each plan by default. If deleted, this card can be re-added by clicking Add Goal > Retirement > Health Care.

Cost Timing

By default, retirement health care costs will begin at the client or co-client's retirement. However, you can choose to start costs at a different time if you wish by using the 'Cost starts' drop-down box in the card to select a different starting point:

You can specify a specific year or client age to start, as well as a client's retirement age or end of plan.

Cost Calculation

There are three ways you can reflect retirement health costs, which you can control using the 'Cost estimate' drop-down box in the card.

Customized Amount

If you use the 'Customized amount' option, you can specify an annual cost number that will be included every year between the 'Cost starts' year through the end of the client's planning horizon.

Detailed Estimate

If you use the 'Detailed estimate' option, you can break out the health care expenses in more detail:

Pre medicare: This represents the health care costs that will be included between the 'Cost starts' date through age 64 (before the client is eligible for Medicare). If the client's retirement health costs start after age 65, this value will not be used.

Medicare part B: Starting when the client turns 65, we will calculate Medicare part B premiums based on Medicare guidelines. This includes the standard premium of $2,096 /yr plus any Income Related Monthly Adjustment Amount (IRMAA). We calculate IRMAA using your calculated AGI from 2 years prior to the current year. For a more exact calculation, list MAGI from the prior 2 years within the Gear Icon > Settings Tab > Tax Assumptions area using the "Detailed input of past MAGI" checkbox.

Medicare part D: Starting when the client turns 65, we assume an average standard Medicare part D premium of $416 /yr. We will also add in IRMAA for Medicare part D using your calculated AGI from 2 years prior to the current year. For a more exact calculation, list MAGI from the prior 2 years within the Gear Icon > Settings Tab > Tax Assumptions area using the "Detailed input of past MAGI" checkbox.

For clients who have opted out of Medicare Part D or do not plan to enroll, choose 'Not Enrolled' from the Medicare Part D dropdown:

Out of pocket: You can add in any additional out-of-pocket costs to Medicare part B & D premiums starting at age 65. The default value of $3,402 represents the approximate remaining costs from the national average, less Medicare part B & D premiums. Out-of-pocket costs can also include supplemental Medigap, dental, and vision coverage.

Detailed Estimate Pro-Tip

For clients already enrolled in Medicare who may be impacted by IRMAA, you can "Specify prior year’s MAGI" in the Gear Icon > Settings > Tax Assumptions tab, to account for the two-year lookback.

National Average

If you use the 'National average' option, the cost used ($6,092) will be the current average cost for a hypothetical individual retiring in 2024 at 65 years old, per Fidelity Investments 2023 retirement health care study. This value will be updated annually; if you select 'National average', the cost will be automatically updated in your client's plan whenever RightCapital updates the national average value.

Cash Flows

Once entered, you can see a breakdown of the retirement healthcare costs in the Retirement > Cash Flows section of the plan. In the Retirement > Cash Flows tab, click on the column headings to navigate to Summary > Expenses > Health Care. Click into 'Client’s Retirement Health Care' (or 'Co-Client's Retirement Health Care') to see a more detailed breakdown. When using the 'Detailed Estimate' option, this includes the calculated values for Medicare part B & D premiums.